Assessing the Quality of Public Services: Does Hospital Competition Crowd Out the For-Profit Quality Gap?

32 Pages Posted: 28 Jul 2020 Last revised: 16 Aug 2020

See all articles by Johannes Kunz

Johannes Kunz

Monash University - Centre for Health Economics; University of Zurich - Department of Economics

Carol Propper

Imperial College London Business School; Centre for Economic Policy Research (CEPR); University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO)

Kevin E. Staub

University of Melbourne - Department of Economics; IZA Institute of Labor Economics

Rainer Winkelmann

University of Zurich - Department of Economics

Date Written: July 2020

Abstract

We examine variation in hospital quality across ownership, market concentration and membership of a hospital system. We use a measure of quality derived from the penalties imposed on hospitals under the flagship Hospital Readmissions Reduction Program. We employ a novel estimation approach that extracts latent hospital quality from panel data on penalties and addresses the problem of never- or always-penalized hospitals in short panels. Our quality measure correlates strongly across penalized conditions and with other non-incentivized quality metrics. We document a robust and sizable for-profit quality gap, which is largely crowded out by competition, particularly amongst high-quality and system-organized hospitals.

Keywords: A ordable Care Act, Competition, Hospital quality

JEL Classification: H51, I1, I11, I18

Suggested Citation

Kunz, Johannes S and Propper, Carol and Staub, Kevin E. and Winkelmann, Rainer, Assessing the Quality of Public Services: Does Hospital Competition Crowd Out the For-Profit Quality Gap? (July 2020). CEPR Discussion Paper No. DP15045, Available at SSRN: https://ssrn.com/abstract=3661388

Johannes S Kunz (Contact Author)

Monash University - Centre for Health Economics ( email )

Building 75, 15 Innovation Walk
Monash University
Clayton, Victoria 3800
Australia

University of Zurich - Department of Economics ( email )

Zürich
Switzerland

Carol Propper

Imperial College London Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO) ( email )

12 Priory Road
Bristol BS8 1TN
United Kingdom

HOME PAGE: http://www.bris.ac.uk/Depts/Economics/department/profiles/propper.htm

Kevin E. Staub

University of Melbourne - Department of Economics ( email )

Melbourne, Victoria 3010
Australia

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Rainer Winkelmann

University of Zurich - Department of Economics ( email )

Zürich
Switzerland

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